According to The Kelsey Group and ConStat, August 2009 represented the first month that online advertising for small- and medium-sized businesses (SMBs) surpassed traditional advertising. The "Local Commerce Monitor" report found 77 percent of U.S. SMBs used online for advertising in August 2009, compared with just 69 percent that used traditional media. That is good news for SMBs.
Is an increase in digital spending by SMBs really surprising?
Directional media and antiquated, broad-brush search campaigns are giving way to more sophisticated solutions for the SMB. For years, analysts and local thought leaders have called for local online marketing solutions based on a dynamic, centralized hub with easy to use tools and access to a reseller partner ecosystem that provides extended regional distribution capabilities. And that was before social media, blogging, and mobile became key components of local search marketing.
Slowly, we are seeing local platform and exchange models take over local online campaigns, and they are unlike the networks with which we are all familiar. Advertising networks like ValueClick and BlueLithium never intended on serving the SMB market, and when they try, the fit is not good. When interactive media professionals think of "networks," they are probably thinking about one-size fits all, centralized systems focused on mass procurement and mass consumption. But that's not what SMBs need, nor is it where their competitive advertising advantage lies.
Local and hyper-local: Tailored interactive marketing
While all marketers are gaining interest in targeting the local markets, accepted wisdom needs to make some fundamental adjustments when it comes to advertising SMBs online.
Think of it simply as this: There are two key segments of local SMB advertising -- national local and hyper-local. National local represents local businesses that want national or international reach -- such as an antique lighting parts distributor. Hyper-local represents your local house painter, Bob, who has a crew of three and is not interested in expanding past your city limits. What the industry generally considers "local" advertising is actually location-based advertising, not either of these two important constituencies.
For instance, when creating a localized directory for Online Directional Media, the impulse is to create a simple taxonomy. Usually these directories take a one-to-many approach. Take coffee. The impulse is to go to Starbucks corporate and populate every single Starbucks location in the "local" directory. Therefore, every time somebody searches for coffee in a specific location, there is a logical answer: the local Starbucks branch.
A more compelling "local" coffee search result would be Carol's Coffee and Toffee -- not Starbucks. No one considers Starbuck's a local brand, despite its attempt to change its name on some storefronts. Finding your local Starbucks is about location-based-advertising. It's still a national brand making a placement that's indicative to a location. It is not about true local advertising. Unless you are a search specialist, it is a mistake you've probably made more than once when the issue of local advertising arises.
Better businesses by integrating search and web technologies
"Local" is about the local small business marketer who wants to advertise within defined parameters. True local advertising is a rifle, not a shotgun. My coffee example above is why ad networks and online directional media by themselves don't work for SMBs -- they aren't dynamic enough to get the job done. As the Kelsey report points out, SMB spending on websites and online profile pages was up more than 26 percent over the summer. But this hasn't necessarily resulted in an increase in ROI.
To effectively reach local consumers, you need a little more than directory listings. SMBs need platforms that turn fragmented internet media (search, directories, web pages, locally targeted banner advertising campaigns, etc.) into simple online advertising offerings with visibility on Bing and Google.
So if, like me, you were preaching the value of integrated options for local search two years ago, and deriding Google AdWords, you can give yourself a big pat on the back.
It is a safe prediction that the increase in spending on websites and profile pages as part of an integrated approach to local advertising did more to achieve the August 2009 benchmark than anything related to spending on directional media, which continues to plummet. Kelsey and ConStat's research indicates what some of us in search have known all along: Educated SMBs mean better advertising and higher demand for solutions that work exclusively for local search and local business.
Did you miss out on the iMedia Agency Summit? Follow the conversation on Twitter at #iMediaSummit.